Washington State lawmakers have approved the state's first income tax, a 9.9% levy on earnings over $1 million. The "millionaires' tax" would affect approximately 20,000 households and generate nearly $4 billion annually if signed by Governor Bob Ferguson. Washington becomes the 42nd state to implement such a tax, ending its status as one of nine states without personal income taxation.

The legislation addresses Washington's $10-12 billion budget gap over four years. Wealthy residents express concerns about capital flight, exemplified by former Starbucks CEO Howard Schultz's announcement to relocate to Florida, following Amazon founder Jeff Bezos who left in 2023. The tax allocates 5% of revenue to childcare programs while expanding tax credits for lower-income families.

Business leaders warn companies like Starbucks and Boeing might reduce their Washington presence, potentially costing high-paying jobs. Legal challenges seem inevitable as the tax could test a 1933 Washington Supreme Court ruling that income counts as property. Despite voters rejecting income taxes 10 times, shifting public sentiment toward wealth redistribution appears to have swayed the legislative outcome.